The Basic State Pension
The best guarantee of security in older age is a decent non means-tested pension linked to earnings. Pensioners should be able to share in the prosperity of the UK, the fourth wealthiest country
in the world.
A decent pension is vital not only to avoid poverty but also social exclusion. Pensioners should be entitled by right to a healthy diet, material security, social participation and a sense of control.
The extent of pensioner poverty in the UK can be illustrated by the following:
Barely 40 per cent of pensioners have enough income to be taxed, whilst some 2.5million pensioners are entitled to income support through the Minimum Income Guarantee (MIG).
The government's latest figures show that 27 per cent of pensioners live on incomes below the poverty line (below 50 per cent of average earnings). In contrast, for those of working age the figure is 14 per cent.
Retirement should be a time to look forward to but unfortunately for many it is not. No one should have to rely on means-tested benefits in later life and lead a lifestyle geared to survival and essentials with little room for positive and active ageing.
UNISON is pursuing the objective of a "living" pension through the following policy:
- A minimum income guarantee for all those in retirement of £150 a week
- Compulsion on all employers to contribute to a pension for their employees
- Restoration of the earnings link to the Basic State Pension (BSP) and uprating to the level it would have been at if the link with earnings had not been originally broken
- All employer and stakeholder schemes to provide a minimum income at retirement based either on a proportion of final earnings or a career average
The link with earnings
The 2001 Budget included a number of pension proposals intended to provide an income of at least £100 a week by 2003. There are three elements to these proposals:
- An above inflation rise in the BSP: £72.50 a week for a single pensioner and £115.90 for couples.
- An increase in the Minimum Income Guarantee (MIG) which tops up the BSP if individuals do not have a private pension or savings of £12,000.
- The introduction of a pensioners' credit for those just above the poverty line
However these proposals do not restore the link with earnings and the increase is
largely dependent on the means tested MIG.
Pensioners do not want to have to make application for what they are entitled to. This is highlighted by the fact that the Government has launched a £15million advertising campaign to persuade 500,000 eligible pensioners (1 in 5 of those who qualify) to claim MIG.
The Government claims that it would be too costly to restore the link with earnings yet it has spent £6.5 billion on pensioners since the 1997 election, £2 billion more than if the link had been restored.
UNISON continues to campaign for a restoration of the link with earnings to ensure a decent BSP because:
- In an increasingly uncertain market place it is an important source of retirement income for both current and future generations
- It is the last defence against pensioner poverty and increased reliance on means-tested benefits which have low take-up and penalise savings
- A final thought - if the link with earnings had not been broken in 1980 the BSP for a single pensioner would currently be £97.60 a week instead of £72.50.